k / 

UNIVERSITY  OF  ILLINOIS 

LIBRARY 

Class 

Book  Volume 

338.8 

334  pa.m 

Ja  09-20M 

> 

The  Gas  Investigation 

of 

1900. 

MASSACHUSETTS  LEGISLATURE. 


ARGUMENT  OF  PARKER  C.  CHANDLER. 


CONDENSATION  OF  THE  ORDER  OF  INVESTIGATION  — 
THE  TESTIMONY  — 

REPORTS  OF  THE  COMMITTEE. 


) 


\CUWY\ 


CONTENTS. 


PAGE 

Argument  of  Parker  C.  Chandler, 5 

Order  of  Investigation, 15 

Condensation  of  Testimony, 17 

Summary  of  Reports  of  the  Committee, 21 

The  Report  of  the  Committee, 23 

The  Minority  Report  of  Charles  F.  A.  Smith, 34 

The  Minority  Report  of  the  Committee, 38 


| O W\YOCj  ,*TC) 


INTRODUCTION. 


V 

u 

tS 

L 

& 


(T> 

A 


This  pamphlet  is  printed  because  no  authorized  report  of  the 
investigation  has  been  published  or  is  generally  accessible,  and 
more  especially  because  some  “views”  have  been  more  fully 
exploited  in  the  press  than  others,  and  perhaps  have  had  an 
undue  prominence ; and  for  the  reason  that  a majority  report 
of  the  legislative  committee  acting  in  the  matter  has  not  been 
possible,  so  inconclusive  was  the  evidence  or  lack  of  evidence 
presented  to  it,  that  that  most  unsatisfying  of  Scotch  verdicts, 
“ JSTot  proven ,”  may  be  rendered,  — and  such  a verdict  warrants 
the  fullest  exploitation  of  the  testimony,  the  reports  and  the 
arguments,  before  the  final  decision  of  the  Legislature,  by  those 
who  have  a real  interest  in  the  matter  at  issue. 


Digitized  by  the  Internet  Archive 
in  2017  with  funding  from 

University  of  Illinois  Urbana-Champaign  Alternates 


https://archive.org/details/gasinvestigationOOchan 


ARGUMENT  OF  PARKER  C,  ‘ CHANDLER.1 


Mr.  Chairman  and  Gentlemen  of  the  Committee  : — 

In  1884  the  sun  rose  and  set  over  Boston  town,  as  it  had  tim- 
idly ventured  to  do  for  several  centuries  before.  The  sun  found 
the  gas  business  of  Boston  in  the  ownership  and  management 
of  the  highest  class  of  local  Brahmins,  who  were  conducting 
the  business  in  what  is  termed  the  “good,  old-fashioned  way,” 
i.e.,  selling  their  neighbors  a low  candle-power  coal-gas  at  three 
times  the  price  now  charged  under  our  “modern,  degenerate 
ways”  for  a high  candle-power  water-gas.  The  sun  naturally 
approved  the  situation,  because  it  was  something  of  a monopolist 
itself ; and  it  came  up  and  went  down  with  old-time  Boston 
regularity,  having  but  one  great  anxiety,  and  that  lest  the 
control  of  the  then  high-priced  Boston  gas  monopoly  might 
be  changed. 

Fearing  this  loss  of  control,  the  patriotic  and  philanthropic 
Boston  gas  men  of  1884  secured  the  passage  of  an  act  by 
the  Legislature  that  no  gas  company  should  be  incorporated  in 
Massachusetts  with  over  $500,000  capital  and  an  equal  amount 
of  bonds.  This  law  was  passed  to  prevent  competition  in  the 
Boston  gas  field,  as  it  was  well  known  that  a gas  plant  to 
compete  in  Boston  would  cost  several  millions  of  dollars ; but, 
in  spite  of  this  attempted  prohibition,  in  1884  the  Boston 
Board  of  Aldermen,  urged  by  the  press  and  the  petitions  of 
thousands  of  Boston’s  leading  citizens  who  were  paying  exorbitant 
prices  for  inferior  gas,  granted  to  the  Consumers’  Gas  Company 
— organized  by  me  under  the  general  laws  of  Massachusetts  — a 
location  in  the  streets  of  Boston ; but  this  order  was  vetoed  by 
Mayor  Martin,  and  for  the  time  competition  was  prevented 
and  high  prices  for  gas  continued. 


6 


In  1885  the  Bay  State  Gas  Company  was  organized,  under 
the  general  laws  of  Massachusetts,  with  the  maximum  capital 
allowed  by  law,  JSOOjtKX)1;  : and  on  one  condition,  proposed  by 
Alderman  Hart,  now  Mayor  Hart,  was  granted  by  the  mayor 
and  aldermen  in  1885  a location  in  the  streets  of  Boston.  This 
condition  was  that  the  company  should  lay  pipes  immediately 
in  every  street  and  lane  of  the  city  of  Boston  in  which  pipes 
were  then  laid,  and  was  intended  to  secure  real  and  actual 
competition  with  every  gas  company  then  doing  business  in 
Boston.  In  the  words  of  ex-Mayor  Matthews:  “In  February, 
1885,  the  Bay  State  Gas  Company  entered  into  a solemn 
contract  with  the  city  of  Boston  to  compete  with  all  the 
existing  gas  companies  in  the  city.” 

In  1885  the  old  Boston  gas  companies,  with  their  usual 
benevolent  instincts,  secured  the  passage  of  an  act  creating  the 
Gas  Commission,  giving  it  the  power  to  regulate  the  price  of  gas 
to  consumers,  and  a veto  power  over  the  creation  of  new  gas 
companies,  so  as  to  prevent  local  competition  in  gas  and  instead 
secure  a regulated  monopoly  in  the  gas  business. 

In  1885  the  Bay  State  Gas  Company  of  Massachusetts  made  its 
arrangements  to  carry  out  its  contract  to  compete  with  all  the 
existing  gas  companies  in  Boston.  It  was  advised  by  eminent 
legal  authority  that  under  the  laws  it  could  only  issue  $500,000 
stock  and  an  equal  amount  of  bonded  debt,  but  that  there  was  no 
limit  fixed  by  law  upon  its  general  indebtedness  ; that  was  left  as 
a mere  question  of  credits. 

The  problem  in  1885  of  entering  into  competition  with  the  then 
powerful  and  prosperous  local  Boston  gas  companies,  with  no 
bonded  indebtedness  and  a capital  of  less  than  $6,000,000,  with 
plants  worth  nearly  double  that  amount,  was  not  a trifling  one, 
and,  were  it  not  for  the  then  high  prices  paid  for  gas  and  the  large 
earning  capacity  of  the  Boston  gas  field,  this  work  would  never 
have  been  undertaken  by  the  Bay  State  Gas  Company.  The 
greatest  impediment  was  the  legislation  which  limited  the  issue  of 


i 


capital  stock  and  bonds  to  an  amount  inadequate  to  construct 
competing  works ; but  the  problem  was  present,  and  action  was 
| demanded,  and  promotive  energy  and  boldness  was  not  lacking 
in  this  instance  any  more  than  in  a thousand  other  instances  in 
the  nineteenth  century  development  of  the  United  States. 

In  1885  the  Bay  State  Gas  Company  of  Massachusetts,  after 
it  had  received  a location  from  the  mayor  and  aldermen  in  the 
streets  of  Boston,  contracted  with  J.  Edward  Addicks,  a citizen 
of  Delaware,  to  construct  in  Boston  harbor  at  deep  water  — 
where  the  coal  and  oil  and  manufacture  of  gas  could  be  most 
economically  handled  — one  of  the  largest  and  most  modern  of 
water-gas  plants,  which  to-day  supplies  nearly  half  the  gas 
used  by  the  citizens  of  Boston. 

This  gas  plant  was  judicially  declared,  through  a commission 
appointed  by  the  Supreme  Court,  to  have  cost  $2,000,000.  The 
consideration  paid  the  contractor  in  1885  to  invest  $2,000,000 
cash,  to  build  a plant,  to  enter  into  a fierce  competition  with 
the  then  rich  and  powerful  Boston  gas  companies  which  were 
established  in  the  field  and  making  great  profits  and  owned 
by  powerful  local  investors,  was  $500,000  stock,  which  was  to 
be  used  to  hold  control  of  the  situation,  and  $4,500,000  in  the 
promise  and  obligation  of  the  Bay  State  Gas  Company  due  in 
ninety-nine  years  from  date  at  a rate  of  interest  equal  to  nine- 
tenths  of  the  net  profits  of  the  business  of  the  company.  This 
$4,500,000  was  redeemable  in  an  equal  amount  of  7%  stock  of 
the  company,  provided  the  Legislature  of  Massachusetts  should 
authorize  it ; and  so  unanimous  was  the  public  and  official 
demand  for  this  competition  in  gas  and  lower  prices  that  the 
authorization  of  the  proposed  increased  issue  of  stock  was 
expected.  Had  its  refusal  been  anticipated,  this  contract  never 
would  have  been  made. 

Under  any  circumstances,  this  promise  to  pay  did  not  call 
for  any  fixed  return  to  those  who  put  $2,000,000  into  the  plant 
and  business,  but  only  “a  percentage  of  the  net  profits  of  the 


8 


business.”  This  transaction  was  no  hardship  to  the  stockholders 
who  were  party  to  the  transaction,  and  proved  no  hardship  to 
the  public,  because  the  Gas  Commission  fixed  the  price  of  gas 
regardless  of  this  document,  which  on  its  face  did  not  call  for 
any  fixed  return. 

The  risks  of  this  new  competing  company  were  great,  and  it 
was  recognized  even  in  1885  that  the  profits  must  be  commen- 
surate. We  must  remember  that  this  was  lon^  before  the  anti- 
stock-watering  tidal-wave  beat  upon  the  sides  of  the  ship  of 
state  in  1894.  It  was  ten  years  before  the  morals  of  Massa- 
chusetts had  become  attuned  to  their  present  high  key,  and 
nearly  thirty  years  since  the  immortal  but  immoral  Massachu- 
setts pioneers  used  oceans  of  watered  bonds  as  well  as  stock 
to  bind  the  Pacific  to  the  Atlantic  Ocean  by  iron  bands,  which 
saved  the  Union  and  wrecked  the  Confederacy.  Still  the  germ 
of  inflation  lurks  in  our  midst,  for  even  the  present  pluperfect 
Legislature  — both  the  Senate  and  House  — have  passed  an  act 
deliberately  giving  a canal  company  $12,000,000  of  securities 
on  which  to  raise  about  $3,000,000  of  cash  to  build  its  plant, 
thus  officially  providing  a speculative  remuneration  to  promoters 
for  the  taking  of  what  they  confess  is  an  excessive  and  unusual 
risk  — almost  water  enough  to  fill  the  canal  itself  and  provide 
for  lockage  for  several  years  of  its  operation. 

History  relates,  when  the  great  Bay  State  gas  plant  was  con- 
structed, that  the  local  Boston  gas  companies  — the  Boston, 
South  Boston,  Roxbury,  and  Dorchester  companies  — made  a 
proposition  to  sell  their  stocks  to  the  Boston  Gas  Syndicate,  in 
which  Mr.  Addicks  had  as  associate  trustees  Mr.  Samuel  Little 
and  Mr.  Eustace  C.  Fitz.  These  local  Boston  gas  stocks  were 
purchased  by  this  syndicate  at  a price  far  above  the  market  value 
and  on  terms  most  agreeable  to  the  Boston  owners,  and  purchased 
with  cash  brought  from  outside  the  Commonwealth.  All  were 
pleased ; no  local  investor  was  harmed  by  this  transaction . The 
proverbial  investing  widow  and  orphan  slept  safely  and  soundly. 


9 


In  this  matter  Mr.  Addicks  and  his  associates  were  received  with 
encomiums. 

By  this  arrangement  a prolonged  gas  war,  which,  as  Brother 
Anderson  states,  always  means  more  capital  charge  against  the 
public,  was  prevented.  More  than  this,  the  result  of  regulation 
and  great  reduction  of  price  of  gas  to  all  the  public,  without  the 
great  expense  and  inconvenience  of  digging  up  all  the  streets  of 
Boston  and  paralleling  of  pipes,  was  secured.  This  peaceful 
result  was  brought  about  without  loss  and  with  profit  to  the  old 
gas  security  holders,  many  of  whom  were  trustees ; and  these  old 
gas  stocks  were  then  made  collateral  security  to  $12,000,000  of 
gas  bonds  which  were  issued  against  them ; so  that  the  result  of 
the  Boston  eras  war  and  settlement  of  1885  was  the  establishment 

O 

under  one  control  of  the  most  modern  and  effective  gas  plant  in 
the  United  States ; and  this  investigation  has  proved  that  down  to 
the  present  day  it  compares  most  favorably  in  efficiency  and 
economy  with  the  best  plants  in  Europe  and  America.  The  gas 
settlement  of  1885  was  made  at  no  inconvenience  to  the  public  by 
reason  of  tearing  up  the  streets,  and  at  no  increase  of  charges 
against  the  public;  and,  while  the  securities  issued  were  increased, 
they  did  not  exceed  the  actual  value  or  cost  of  the  combined  plants. 
It  is  rather  a conservative  result  of  a gas  war  when  the  outstand- 
ing securities,  while  increased,  only  represent  real  values,  and  no 
increased  charges  against  the  public  in  the  light  of  the  results  of 
the  last  gas  war  in  Boston,  which  leaves  the  outstanding  securities 
increased  by  about  $34,000,000  based  on  an  increase  of  only  a 
few  millions  of  property. 

After  the  settlement  of  the  Boston  gas  war  of  1885,  by  the 
sale  of  the  stocks  of  the  Boston,  South  Boston,  and  Roxbury  gas 
companies  to  the  Boston  Gas  Syndicate  — which  syndicate  had 
already  acquired  by  purchase  the  stock  of  the  Bay  State  Gas 
Company  of  Massachusetts,  thus  concentrating  the  stocks  of  all 
the  central  and  important  gas  companies  in  Boston  in  one  owner- 
ship and  control,  which  was  essential  to  the  most  modern  and 


10 


economical  conduct  of  the  business  — all  these  stocks  became  the 
property  of  the  Bay  State  Gas  Company  of  Delaware,  which 
caused  $12,000,000  of  bonds  to  be  issued  against  them;  and,  as 
these  same  gas  companies  were  then  earning  nearly  double  the 
amount  of  the  charges  on  these  bonds,  this  arrangement  did  not 
seem  unfair  to  the  consumers  of  gas  or  unjust  to  the  investing 
public,  and  until  1893  the  constant  report  of  the  watch  in  Boston 
town  was  ‘ ‘ All  is  well ! ” 

The  Boston  gas  companies,  under  the  Addicks  control,  had  been 
gradually  reducing  the  cost  of  gas  to  consumers  and  perfecting 
the  efficiency  of  the  plant,  introducing  water-gas  of  a very  satis- 
factory quality,  and  all  under  the  wise  and  efficient  control  and 
direction  of  the  Gas  Commission,  when  a new  star  arose  in  the 
firmament.  Another  reformer  had  to  be  placated  ! — Mayor 
Matthews,  assisted  by  the  officially  recognized  guardian  of  the 
public  conscience,  George  Fred  Williams,  and  leading  by  hand 
Brother  Anderson,  who  then  sat  in  a high  chair  at  the  reform 
table,  resplendent  in  new  frock  and  pantalettes  of  a youthful 
reformer.  This  coterie  of  aspiring  saints,  with  misfitting  halos, 
started  the  gas  investigation  of  1893,  which  resulted  in  great 
happiness  to  its  investigators,  because  it  made  others  unhappy 
and  caused  a shrinkage  in  values  which  ruined  many  an  investor 
in  gas  securities,  — securities  which  were  legally  issued  and 
honestly  outstanding.  There  was  no  necessity,  save  selfish,  reck- 
less personal  ambition,  for  this  raid  on  gas  in  1893.  There  had 
been  no  increase  in  the  outstanding  stocks  of  the  local  gas  com- 
panies, and  if  the  $4,500,000  note  was  illegal  the  law  courts 
could  have  settled  this  question  in  due  course,  and  the  Gas  Com- 
mission had  full  power  to  make  the  price  of  gas  based  on  its 
actual  cost  and  the  capital  charges  which  should  properly  be 
considered,  which  were  not  increased  by  the  terms  of  the 
$4,500,000  note,  which,  in  fact,  were  not  considered  by  the 
Gas  Commission  when  in  1893  they  reduced  the  price  of  gas  in 
Boston  to  $1  per  thousand  feet. 


11 


The  investigation  of  1893  resulted  in  an  act  which  forced  a 
valuation  of  the  Bay  State  works,  which  were  valued  by  the 
} Supreme  Court  commissioners  not  at  $500,000,  as  alleged  by 
the  investigators,  but  $2,000,000 ; and  under  the  act  that  amount 
of  stock  was  issued  by  the  Bay  State  Company  in  lieu  of  the 
$4,500,000  contract.  This  was  all  that  came  out  of  that 
virulent,  expensive  investigation ; and  this  result  could  have 
been  attained  in  usual  and  orderly  methods,  as  it  was  in  the 
same  year  by  an  order  of  the  Gas  Commission,  reducing  the 
price  of  gas  in  Boston  to  $1. 

This  raid  on  the  property  and  values  of  the  gas  companies 
in  Boston,  and  the  reduction  in  price  of  gas,  and  some  personal 
controversies  brought  on  the  gas  war  in  1894,  led  by  the 
Standard  Oil  interests,  which  resulted  in  much  of  the  Boston 
pipe  system  being  duplicated  by  the  Brookline  Gas  Company ; 
and  in  1896,  after  an  exhaustive  struggle,  a halt  was  called 
and  terms  of  peace  made. 

In  1896  the  Massachusetts  Pipe  Line  charter  was  obtained, 
with  a $5,000,000  joker  attached,  and  in  1897  the  New  England 
Gas  and  Coke  Association  made  its  bow  in  the  arena,  with  a 
few  bales  of  attractively  illuminated  securities.  I am  aware 
that  the  modern  circus  operates  several  rings  simultaneously, 
but,  all  the  same,  the  modern  boy  sees  no  more  at  one  time 
than  the  old-style  boy,  although  he  may  honestly  think  that  he 
does. 

I represent  at  this  investigation  the  Bay  State  Gas  Company 
of  Delaware,  a corporation  which  was  chartered  by  the  sovereign 
state  of  Delaware,  with  the  right  to  buy,  sell,  or  hold  gas 
securities  in  any  state  of  the  Union.  This  Delaware  corporation 
has  purchased  and  holds  millions  in  value  of  gas  securities  in 
several  states  of  the  Union ; and  it  purchased  in  1885  several 
millions  of  gas  stocks  of  Massachusetts  corporations,  and  paid 
cash  for  them  to  the  profit  of  citizens  of  Massachusetts,  hundreds 
of  thousands  of  dollars  more  than  the  price  they  were  selling 


12 


for  in  the  open  market.  Certainly  it  is  no  crime,  although  it 
may  be  a danger,  to  invest  in  Massachusetts  securities. 

The  conduct  of  this  Bay  State  Gas  Company  of  Delaware  of 
its  own  business  affairs  is  the  concern  of  our  sister  state  of 
Delaware,  not  of  the  legislature  of  any  other  state.  It  has 
never  done  any  business  in  any  other  state  than  Delaware.  The 
most  it  has  ever  done  in  Massachusetts  is  to  vote  the  stock 
it  owns  at  annual  meetings,  and  that  is  no*' prime,  but  an 
obligation  imposed  by  this  commonwealth. 

Since  1893  and  one-dollar  gas,  the  Massachusetts  companies 
owned  by  the  Bay  State  Gas  Company  of  Delaware  have  not  quite 
earned  an  amount  equal  to  the  interest  on  the  $12,000,000  of 
gas  bonds  outstanding,  and  this  deficit  the  Delaware  Company 
has  paid,  together  with  several  hundreds  of  thousands  of  dollars 
of  sinking  fund,  so  as  to  protect  its  equities  in  these  Boston 
properties,  for  when  the  bonds  are  paid  off  these  plants, 
constantly  increasing  in  value,  will  be  the  property  of  the  Bay 
State  Gas  Company  of  Delaware.  It  has  not  been  since  1893 
in  receipt  of  income  from  its  investment  in  Massachusetts  ; and 
it  is  not  gracious,  to  say  the  least,  to  make  fun  of  its  enforced 
misfortunes,  brought  upon  it  by  no  intentional  fault  of  its  own, 
but  by  drastic  legislation,  which  if  continued  in  the  future  in 
our  good  old  commonwealth  will  have  one  advantage  in  that 
it  will  do  away  with  any  need  for  legislation,  as  no  one  who 
can  escape  will  permit  his  property  to  be  legislated  out  of 
existence ; and  the  flags  will  come  down  from  the  State  House, 
and  only  the  signs  remain,  “Keep  off  the  Grass”  and  “Closed 
for  Repairs.” 

As  men  grow  older,  Mr.  Chairman,  they  hesitate  to  risk  the 
happiness  of  others,  and  so  I shall  close  my  remarks  without 
useless  invective.  In  the  olden  times  history  has  been  repre- 
sented by  mural  illustrations  in  processional  form ; permit  me 
to  describe  this  investigation  as  a suggested  procession  to  be 
painted  on  the  walls  of  this  committee  room. 


13 


First  come  the  sappers  and  miners,  Engstrom  and  Anderson, 
“blazing  the  way.”, 

| Second  come  your  honorable  Committee,  44eZe  bene.” 

Third,  the  New  England  Coke  and  Gas  Company,  masquerad- 
ing as  44  the  inscrutable  man  in  the  iron  mask.” 

Fourth,  the  Massachusetts  Pipe  Line  Company,  masquerading 
as  the  local  lire  department,  more  especially  the  hose  company. 

Fifth,  the  Brookline  and  Dorchester  companies,  the  Whitney 
aggregation,  with  Brother  Butler  as  bandmaster,  with  the  refrain 
44 1 Object.” 

Sixth,  the  old  Boston  gas  companies,  the  Addicks  contingent, 
Brother  Morse  bearing  a banner  with  the  legend,  4 4 Lost, 
Strayed,  or  Stolen  ! ” 

Seventh,  supernumeraries,  villagers,  peasants,  chorus  and 
ballet,  by  Brothers  Barron  and  Whipple. 

Eighth,  the  4 4 Little  Child  of  Delaware,”  the  real  orphan  on 
this  occasion,  led  by  counsel. 

The  procession  closes  with  Brother  Albers  leading  the  great 
bear  of  State  Street,  surrounded  by  several  hundred  of  the  gas 
consumers,  whose  bills  average  less  than  one  dollar  a year. 

Permit  me,  in  closing,  to  quote  with  a slight  change,  a verse 
from  the  second  chapter  of  Genesis,  describing  the  Creation : 
44  And  God  made  man  and  rested;  and  God  made  the  earth  and 
rested ; and  more  recently  God  made  Thomas  W.  Lawson,  and 
since  then  neither  God  nor  man  has  rested,”'  — but  I will. 


r 

i 


THE  ORDER  OF  INVESTIGATION. 


The  order  instructed  the  committee  to  investigate  the 
expediency  of  reducing  the  price  of  gas  in  the  city  of  Boston  ; 
to  report  the  evidence  on  which  their  recommendations  are 
based,  and  also  copies  of  all  contracts  made  by  and  between 
all  corporations  or  associations  engaged  in  the  production 
or  distribution  of  gas  in  Boston ; and  also  whether  there 
has  been  any  violation  of  any  of  the  laws  of  this  Common- 
wealth by  any  such  corporation  or  association,  and,  if  so, 
what  violations,  and  what  measures  have  been  taken  to  pun- 
ish or  restrain  the  offenders,  together  with  the  committee’s 
recommendations  to  the  General  Court. 


9 


THE  TESTIMONY. 


The  twenty-six  sessions  of  the  investigation  were  more 
remunerative  to  the  stenographers  than  other  participants, 
for  there  were  hours  and  hours  of  words,  accusations 
and  oratory,  and  many  “heated  moments.”  The  records 
and  reports  of  the  Gas  Commission  and  privately  printed 
romances  of  monocular-English  gas  companies  and  dreamy 
tabulated  statements  of  gas  amateurs,  as  well  as  yards  of  gas 
company  contracts,  were  introduced  on  the  record.  The 
investigators  did  not  produce  any  outside  gas  expert  talent 
as  to  the  cost  of  gas  in  other  localities  than  Boston  or  in 
Boston  itself ; and,  as  the  gas  manufactured  at  Everett  is  a 
by-product,  and  confessedly  costs  nothing,  this  information 
naturally  had  little  bearing  on  the  subject  of  cost.  The 
chief  engineer  of  the  Boston  Gas  Company  was  called  and 
examined  and  cross-examined,  and  by  general  consent  of 
the  committee  and  council  his  testimony  was  accepted  as 
able  and  true ; and,  while  he  declined  to  respond  to  those 
matters  of  which  he  had  no  knowledge,  he  did  testify  that 
the  present  cost  of  manufacturing  gas  was  about  fifteen  cents 
a thousand  more  than  in  past  years,  by  reason  of  the  in- 
creased price  charged  for  coal,  naphtha  and  other  supplies, 
as  well  as  for  labor ; and  he  also  averred  that  in  his  opinion 
the  cost  of  gas  would  not  be  less  for  the  coming  year. 

Price  of  Gas  not  excessive. 

The  concensus  of  the  opinion  of  all  witnesses  familiar 
with  gas  manufacture  was  that  the  present  price  of  gas  was 
not  excessive ; and,  taking  into  account  the  conceded  legiti- 
mate charges  to  be  made  in  making  up,  the  price  of  gas 
was  at  the  present  time  too  low  rather  than  too  high,  — in 
fact,  that  the  present  was  an  “off  year”  for  the  consumer 
to  examine  into  the  price  of  gas.  There  was  evi- 
dence produced  that  “ foreign  citizens  ” of  the  United  States, 


18 


i.e .,  non-residents  of  Massachusetts,  had  had  the  temerity 
to  invest  in  the  stocks  of  Massachusetts  corporations  in  vio- 
lation of  the  constitution  and  laws  of  this  Commonwealth ; 
but  it  was  clearly  shown  that  they  had  been  sufficiently 
punished,  and  no  further  drastic  legislation  was  needed  to 
prevent  any  repetition  of  the  crime. 

There  was  proof  that  in  1893  the  then  Legislature  made 
an  exhausting  investigation  of  the  Boston  gas  situation,  and, 
finding  nothing  done  contrary  to  law,  made  some  laws  with 
reference  to  the  local  gas  situation,  which  were  thereafter 
fully  and  fairly  lived  up  to  by  the  local  gas  company  mostly 
concerned. 

The  Boston  Gas  War. 

There  was  further  evidence  that  from  1893  to  1896  there 
was  a violent  gas  44  competitive  examination”  in  Boston,  far 
more  useful  and  interesting  to  the  spectators  than  the  con- 
testants ; that  this  gas  war  resulted  in  the  investment  of 
several  millions  of  dollars  by  the  4 4 Standard  Oil  party,”  in 
duplicating  the  works  and  gas  mains  of  the  local  Boston  gas 
companies  and  in  largely  exhausting  the  surplus  of  the 
owners  and  backers  of  the  old  Boston  gas  companies.  This 
war  was  concluded  by  the  treaty  of  May  6,  1896,  — the  Boston 
and  Brookline  contract,  — by  which  the  competition  was 
ended,  and  4 4 nursing  ” guaranteed  to  the  Brookline  Com- 
pany by  the  Boston  Company  until  the  former  became  44  con- 
valescent.” And  this  agreement  has  remained  in  force  with 
44  hospital  charges  ” to  date  of  about  $200,000. 

The  Massachusetts  Pipe  Line  Company. 

There  was  evidence  introduced  that  in  1896  the  Massa- 
chusetts Pipe  Line  Company  was  incorporated,  and  was 
intended  as  a means  of  consolidating  all  the  local  Boston 
gas  companies  into  one  aggregation ; but  this  much-to-be- 
desired  result  did  not  come  about,  but  instead  some  venture- 
some 44  foreigner  Americans”  formed  the  JSfew  England  Gas 
and  Coke  Company,  which  was  not  exactly  a company,  — 
44  limited,”  — but,  as  it  turned  out,  an  44  involuntary  associa- 
tion ” of  underwriters,  — 44  unlimited,”  — who  contracted  to 
purchase  a menagerie,  — the  Brookline,  Dorchester  and 
Jamaica  Plain  companies,  and  an  assorted  lot  of  patents, 


19 


bonds  and  stocks,  all  the  property  of  the  late  Standard  Oil 
party’s  gas  picnic  in  Boston.  By  spipe  qver  or  under  sight, 
some  property  “ lost  its  tag,”  and  when  the  u round-up  ” took 
place  in  the  “ gloaming,”  the  mgyig]g,omhnt,6i  the  Bpsfon,  Bay 
State,  South  Boston  and  Roxbury  companies,,  Tylii,ch  should 
have  been  tagged  “ II.  II.  Rogers,  ll±  If  if  Ridge,  A.  C. 
Burrage , Trustees,”  was  advertised  and  appeared  without 
its  “ brand  ” in  the  corral  and  later  in  the  official  caravansary 
of  the  nondescript  New’  England  Gas  and  Coke  Company. 

The  Present  Boston  Gas  Situation. 

Evidence  further  showed  that  the  result  of  this  unfortu- 
nate mix-up  has  been  that  the  “ gas  situation  ” in  Boston  is 
no  nearer  settlement  than  it  has  been  for  years ; for,  while 
the  “ management  ” of  the  Bay  State,  Boston,  South  Boston 
and  Roxbury  companies  was  “at  home”  in  the  Coke  Com- 
pany corral,  these  “lost,  strayed  or  stolen”  corporations 
were  formerly  violated  and  entered  into  uniform  and  uni- 
lateral contracts  to  buy  all  the  gas  they  should  use  at  a 
-fixed  price  for  fifty  years  to  come , thus  to  abandon  their 
plants  and  manufacturing  business  without  the  knowledge  or 
consent  of  their  stockholders  or  the  Commonwealth  which 
had  created  them  to  do  business.  These  contracts  are 
against  public  policy,  not  only  prevent  these  local  gas  com- 
panies from  making  gas  more  economically,  if  the  state  of 
the  art  in  coming  years  might  enable  them  to,  but  prevent 
them  for  fifty  years  from  contracting  with  any  other  company 
which  might  have  a cheaper  system  for  gas  production  than 
the  Everett  works,  and  also  put  a stop  to  municipal  owner- 
ship, unless  these  contracts  are  bought  up.  But,  most  wicked 
of  all  devices,  the  Coke  Company  have  a fifty-year  option 
during  which  this  “hold-up”  continues,  and  no  obligation 
on  its  part  to  supply  any  gas  at  any  price  at  any  time. 

The  Real  Danger  to  the  Public. 

It  was  shown  that,  if  the  fifty-year  contracts  are  not  de- 
clared illegal  by  the  courts  or  abrogated  by  the  Legislature , 
the  New  England  Gas  and  Coke  Company  may  at  its  option 
manufacture  and  sell  — via  the  Massachusetts  Pipe  Line 
Company,  the  entire  stock  of  which  company  is  in  its 


20 


treasury  — all  the  gas  used  in  Boston;  and,  no  matter  how 
cheap  gas  may  be  ‘mfthnfactured  in  the  next  fifty  years,  under 
these  contracts  (of  which  the  Legislature  now  has  full  notice 
and  lcilwQledge,  by  the'  I'efioffsof  this  investigating  committee , 
and  if  it  dees  not  annul  them , in  effect  ratifies  them  for 
all  time)  "tliC . price  'to  the  public  must  be  based  on  the 
contract  price  by  the  Gras  Commission  when  it  estimates 
the  price  of  gas.  This  is  an  unfair  arrangement  for 
the  gas-consuming  public,  but  the  real  danger , almost  a 
crime , is  for  the  Legislature  to  permit  all  of  the  numerous 
splendidly  equipped  gas  plants,  economically  and  con- 
veniently located  in  the  several  sections  of  the  city,  to  be 
disintegrated  and  dismantled,  and  the  sole  reliance  placed  on 
a single  manufacturing  plant  not  located  in  the  city,  or  pay- 
ing taxes  to  it,  as  does  the  several  millions  of  dollars  worth 
of  gas  property  to-day.  The  destruction  of  the  works  at 
Everett  would  leave  the  city  of  Boston  without  a gas  sup- 
ply, as  would  their  abandonment  after  afire,  or  when  a tariff 
or  change  in  the  price  of  materials  or  the  failure  of  the 
general  business  venture  at  Everett  should  make  the  gas  by- 
product a manufacturing  impossibility.  This  is  a real  dan- 
ger, because  after  the  local  gas  companies  go  out  of  business 
and  dismantle  their  plants,  and  the  Pipe  Line  Company  — 
which  has  no  manufacturing  plant , and  its  guarantee  is  not 
good  for  more  than  its  short-service  pipe  line  — cannot  or 
will  not  supply  gas  at  a price  demanded  by  the  public  or 
Gas  Commission,  then  the  New  England  Gas  and  Coke 
Company  will  be  in  “the  saddle.”  It  is  not  and  possibly 
legally  cannot  be  controlled  in  the  manufacture  of  gas  by  the 
Legislature,  so  long  as  it  is  not  a nuisance  and  makes  and 
delivers  on  its  own  property  gas  to  the  Pipe  Line  Company. 
The  control  of  the  Pipe  Line  Company  is  of  no  practical 
avail,  as  soon  as  the  local  gas  works  are  dismantled,  because 
the  city  will  have  only  the  Coke  Company  plant  to  supply 
it  with  gas,  and  even  the  Commonwealth  cannot  afford  to 
prevent  the  citizens  of  Boston  having  a supply  of  gas,  even 
at  an  exorbitant  price,  rather  than  be  without  a supply.  In 
a few  months  the  manufacture  of  gas  will  in  fact  pass  out 
of  the  control  of  the  Gas  Commission  and  in  law  will 
practically  be  beyond  reach  of  the  Legislature. 


21 


SUMMARY  OF  REPORTS  OF  COMMITTEE. 


Do  not  recommend  Reduction  of  Price. 

That  it  is  unwise,  under  existing  conditions,  to  reduce 
the  price  of  gas  in  Boston,  — legislation  ordering  a reduction 
from  present  prices  might  force  the  companies  to  reduce  the 
present  candle-po\^er  in  order  to  escape  selling  gas  at  a 
loss ; that  the  cost  of  gas,  on  account  of  the  increased  price 
of  coal,  naphtha  and  other  ingredients,  as  well  as  of  labor, 
is  at  least  fifteen  cents  more  per  thousand  cubic  feet  than 
last  year. 

The  New  England  Gas  and  Coke  Company. 

That  the  New  England  Gas  and  Coke  Company,  if  its  con- 
tract with  the  Massachusetts  Pipe  Line  Company  and  the 
contracts  of  these  companies  with  the  Boston  local  gas  com- 
panies are  maintained  by  the  courts  and  upheld  by  this 
Legislature,  will  in  the  near  future  manufacture  at  Everett 
all  the  gas  consumed  in  Boston. 

That  when  all  the  gas  is  manufactured  by  the  Coke  Com- 
pany at  Everett,  all  the  gas-manufacturing  plants  in  Boston 
owned  by  the  local  companies  will  go  out  of  business,  and 
then  the  manufacture  of  gas  for  Boston  will  cease  to  be  under 
the  control  of  the  Gas  Commission. 

That  the  clause  in  the  Pipe  Line  charter  restricting  the 
price  charged  for  gas  in  Boston  applies  only  to  sixteen 
candle-power  gas,  and  an  unrestricted  and  arbitrary  charge 
may  be  made  for  enriching  the  gas  to  a higher  candle-power. 

The  Gas  Commission. 

That,  where  the  Gas  Commission  has  power,  it  should 
exhaust  that  power  before  application  is  made  to  the  Legis- 
lature for  relief. 


22 


That  the  Legislature  should  give  the  Gas  Commission 
power  to  annul,  after  notice  and  hearing,  any  contract  or 
arrangement  for  the  purchase  of  gas  made  by  any  corpora- 
tion selling  gas  in  this  Commonwealth.  ( 

That  the  Coke  Company  shall  be  incorporated,  and  submit 
itself  to  the  same  laws  and  regulations  that  all  other  Massa- 
chusetts gas  companies  do,  or  shall  by  agreement  with  the 

Gas  Commission  submit  itself  to  the  usual  laws  and  re<mla- 

© 

tions  governing  gas  corporations,  or  be  retired  from  the 
business  of  selling  gas  to  Massachusetts  corporations. 

That  a consolidation  of  all  the  companies  in  Boston  would 
expedite  a settlement  of  the  gas  war  and  Boston’s  “gas 
problem.” 

That  the  Boston-Brookline  contract,  which  has  cost  the 
former  company  nearly  $200,000  to  date,  is  an  unjust  charge 
against  the  Boston  public,  and  is  beyond  the  scope  of  its 
charter  rights,  a detriment  to  its  stockholders,  ultra  vires 
and  hence  illegal,  and  should  be  declared  void  by  the 
Legislature. 

That  the  removal  of  the  gas-manufacturing  plants  from 
Boston  to  Everett  will  result  in  a large  reduction  in  tax 
receipts  to  Boston. 


23 


CONDENSATION  OF  COMMITTEE  REPORT. 


SIGNED  BY  C.  J,  McPHERSON,  CHARLES  H.  HANSON,  JAMES  H.  McKINLEY, 
THOMAS  H.  GREEN,  JAMES  PEARCE,  FRED.  H.  BATES, 

A.  WEBSTER  BUTLER. 


The  Boston  Gas  Situation. 

There  are  nine  gas  companies  selling  gas  in  Boston,  — 
the  Bay  State,  Boston,  South  Boston,  Roxbury,  Dorchester, 
Brookline,  Jamaica  Plain,  East  Boston  and  Charlestown, — 
with  a total  capital  stock  of  $9,029,600;  total  assets, 
$19,335,538.03;  total  liabilities,  $13,709,206.39;  accumu- 
lated surplus,  $6,233,523.14. 

The  gas  companies  have  charged  all  new  work  to  “ con- 
struction ” and  charged  off  nothing  to  depreciation,  so  the 
book  assets  are  largely  in  excess  of  the  actual  assets.  The 
4 ‘ accumulated  surplus  ” shows  that  besides  paying  dividends 
a considerable  sum  has  been  accumulated  to  secure  against 
accident  or  contingency  and  depreciation.  A single  excep- 
tion must  be  made  to  this  statement.  The  Brookline  Com- 
pany has  no  surplus.  Its  liabilities  are  $303,595.75  in 
excess  of  its  assets.  In  1893  the  Brookline  Company  sold 
less  gas  than  the  Dorchester  Company,  had  a capital  of 
$500,000,  total  assets  of  $1,111,985.36,  total  liabilities  of 
$1,068,116.67,  showing  a surplus  of  $43,868.69.  From 
1893  to  1896  this  company  entered  into  a gas  war  with  the 
Boston  companies,  and  at  its  close  the  book  assets  of  the 
company  are  $4,627,907.35  and  liabilities  of  $4,931,503.10, 
showing  a deficit  of  $300,000.  Its  actual  assets  are  less,  as 
estimated  by  the  Gas  Commission,  — $1,000,000  less  than 
the  above  book  assets. 

The  Charlestown  and  East  Boston  companies  have  no 
outstanding  bonds,  and  their  management  and  stock  are 
strictly  local,  although  negotiations  are  under  way  to  secure 


24 


the  gas  manufactured  by  the  New  England  Gas  and  Coke 
Company.  The  Bay  State,  South  Boston,  Boston  and  Rox- 
bury  companies  have  no  bonds  outstanding ; but  the  stocks 
of  these  companies  are  owned  by  the  Bay  State  Gas  Com- 
pany of  Delaware,  and  these  stocks  are  pledged  with  the 
Mercantile  Trust  Company  of  New  York  for  an  issue  of  less 
than  $12,000,000  of  debenture  bonds.  The  Brookline, 
$1,000,000  bonds  outstanding,  Dorchester  and  Jamaica 
Plain  companies,  no  bonds  outstanding,  are  controlled  by 
the  New  England  Gas  and  Coke  Company,  which  pledged 
their  ownership  in  the  stocks  of  these  three  companies 
with  the  Central  Trust  Company  of  New  York,  and  issued 
$17,500,000  bonds. 

The  Bay  State  of  Delaware  owned  and  controlled  the 
companies  mentioned  above  in  1893,  when  the  Legislature 
held  an  investigation  of  the  gas  situation,  and  still  holds 
them  under  the  terms  and  conditions  decided  upon  by  the 
Legislature.  There  has  been  no  change  in  the  situation  so 
far  as  these  companies  are  concerned,  except  the  contracts 
made  between  the  Brookline  and  Boston  companies  and  the 
Massachusetts  Pipe  Line  Company  and  the  several  local 
companies. 

The  gas  war  between  Mr.  Rogers  of  the  Standard  Oil 
Company  interest  of  New  York  and  Mr.  Addicks  of  the  Bay 
State  Company  of  Delaware  was  concluded  in  May,  1896, 
by  a contract  made  between  the  Brookline,  Mr.  Rogers’s 
company,  and  the  Boston  Gas  Company,  Mr.  Addicks’s 
company.  The  object  of  this  agreement  was  to,  and  did, 
stop  competition, — each  company  was  to  keep  out  of  the 
territory  of  the  other.  In  consideration  of  this,  the  Bos- 
ton Company  agreed  to  provide  funds  to  pay  interest  on 
the  debts  created  by  the  gas  war  and  ten  per  cent,  on  its 
capital.  About  $200,000  has  been  paid  from  the  treasury 
of  the  Boston  into  the  treasury  of  the  Brookline  under  this 
arrangement. 

This  Boston  and  Brookline  contract  was  part  of  a larger 
arrangement  made  at  that  time  between  the  so-called  Ad- 
dicks interests,  or  the  Bay  State  of  Delaware  interests,  and 
the  Standard  Oil  interests.  The  Bay  State  of  Delaware  was 
to  purchase  from  the  Standard  Oil  interests  their  entire  hold- 


25 


ings  in  the  Boston  gas  field,  paying  for  them  on  Nov.  1, 
1896.  This  arrangement  was  also  part  of  a still  larger  un- 
dertaking. Early  in  the  winter  of  1896  Mr.  Henry  M. 
Whitney  applied  to  the  Legislature  for  a charter  for  the  pur- 
pose of  enabling  him  to  sell  the  gas  which  he  proposed  to 
manufacture  as  a by-product  of  the  process  of  manufacturing 
coal  bought  from  the  Dominion  Coal  Company  of  the  Prov- 
inces into  coke.  It  was  claimed  that  a great  public  benefit 
would  be  derived  by  means  of  this  charter,  and  that  the 
price  of  gas  would  thus  be  rendered  very  much  lower,  and 
that  it  would  be  practicable  for  the  community  to  use  gas 
very  largely  for  fuel  purposes.  After  this  proposition  had 
been  before  the  Legislature  of  1896  for  some  time,  an  ar- 
rangement was  made  between  all  the  large  interests  then 
represented  in  the  Boston  gas  field,  by  which  this  charter 
was  to  be  used  as  a practical  method  of  consolidating  the 
Boston  gas  companies.  The  Boston  and  Brookline  contract 
was  a part  of  the  arrangement  by  which  the  gas  companies 
of  Boston  were  to  be  practically  consolidated,  the  Standard 
Oil  interests  were  to  be  bought  out,  leaving  Messrs.  Acldicks 
and  Whitney  in  full  control  of  the  field.  The  veto  of  the 
original  Pipe  Line  charter  by  Governor  Wolcott  on  June  2, 
1896,  thwarted  these  plans.  But  the  Boston  and  Brookline 
contract  remained  after  the  larger  scheme  of  which  it 
was  a part  had  gone  to  wreck.  Owing  to  a failure 
on  the  part  of  the  Bay  State  Gas  Company  of  Delaware 
to  pay  the  sum  agreed  for  the  Standard  Oil  interests  on 
Nov.  1,  1896,  the  old  directors,  designated  by  Mr.  Addicks, 
of  the  Boston,  Bay  State,  Dorchester,  South  Boston  and 
Roxbury  companies,  resigned,  and  persons  designated  in 
the  Standard  Oil  interests  were  elected  in  their  places. 
The  stock  of  the  Bay  State  Gas  Company  of  New  Jersey, 
which  company  was  then  in  the  possession  of  the  Bay  State 
Gas  Company  of  Delaware,  was  transferred  to  three  trus- 
tees, — Messrs.  Henry  H.  Rogers,  John  G.  Moore  and 
Albert  C.  Burrage,  who  thus  became  the  trustees  of  the 
voting  trust,  and  were  enabled  to  designate  directors  for 
all  the  Boston  gas  companies  except  the  East  Boston, 
Charlestown  and  Jamaica  Plain,  none  of  which  had  then 
come  under  their  control. 


26 


No  steps  were  taken  to  avail  of  the  charter  granted  the 
Massachusetts  Pipe  Line  Company  until  the  fall  of  1897. 

At  that  time  a new  and  important  development  occurred  in  ( 

the  Boston  gas  field,  — the  New  England  Gas  and  Coke  Com- 
pany was  formed.  This  is  an  unincorporated,  voluntary 
association,  whose  affairs  are  managed  by  a board  of  trustees 
whose  powers  and  purposes  are  defined  in  a declaration  of 
trust  dated  Sept.  30,  1897.  The  following  description  of 
this  concern  is  taken  from  the  report  of  the  Gas  Commis- 
sioners for  1898,  pages  6 and  7 : — 

The  New  England  Gas  and  Coke  Company  is  an  unincorporated 
voluntary  association,  whose  affairs  are  managed  by  a board 
of  trustees,  and  whose  powers  and  purposes  are  defined  in  a decla- 
ration of  trust  dated  Sept.  30,  1897.  By  the  terms  of  this  declara- 
tion the  property  of  the  company  is  divided  into  two  hundred 
thousand  shares  of  the  par  value  of  fifty  dollars  each.  Its 
property  is  to  be  held  and  its  affairs  managed  by  a board  of 
trustees,  who  are  empowered  to  “ employ  the  trust  property  . . . 
in  manufacturing,  buying,  selling  and  dealing  in  coal,  oil,  coke, 
gas  and  all  the  products  thereof,  and  in  business  similar  thereto, 
including  electrical  business  of  all  kinds.”  The  trustees  are 
also  empowered  “ to  buy  any  property  ” (including  shares  and  bonds 
issued  under  the  declaration  of  trust),  “real  and  personal,  and 
any  rights,  franchises,  privileges  or  securities  which  the  con- 
duct of  said  business  may,  in  their  judgment,  require,  and  may, 
in  their  judgment,  tend  to  promote  its  successful  prosecution 
and  the  interest  of  the  shareholders,  and  to  hold,  use  or  sell 
the  same,  or  any  part  thereof,  at  their  discretion  ; ” “to  borrow 
money  for  the  business  or  for  the  purchase  of  the  property 
herein  authorized,  to  give  notes  or  other  obligations  therefor, 
and  to  pledge  or  mortgage  all  or  any  part  of  the  trust  property 
to  secure  such  notes  and  obligations  or  any  contract  entered  into 
in  the  course  of  the  execution  of  this  trust ; ” “to  make  a lease  or 
leases  of  the  trust  property  or  any  part  thereof.”  Acting  under 
these  powers,  the  company  has  executed  a mortgage  or  deed  of 
trust  to  secure  its  bonds  or  certificates  of  indebtedness  for  the 
total  amount  of  $17,500,000  par  value,  being  17,500  obligations 
of  $1,000  each,  to  the  Central  Trust  Company  of  New  York. 
Thirty-five  hundred  of  these  obligations  are  not  to  be  issued  until 
other  property  is  acquired,  but  14,000  ($14,000,000)  are  to  be 
issued  at  once,  for  which  the  following  properties  are  named  in 
the  mortgage  as  security : certain  real  estate  in  the  city  of  Chel- 


27 


sea  and  town  of  Revere  in  this  Commonwealth ; a certain  con- 
tract with  the  Dominion  Coal  Company ; licenses  from  the  Otto 
Coke  and  Chemical  Company  and  the  United  Gas  and  Coke 
Company  to  use  certain  patent  processes  for  the  manufacture  of 
gas  and  coke,  including  those  known  as  the  Otto-Hoffman  patents  ; 
Boston  United  Gas  bonds,  first  series,  of  the  par  value  of  $1,000,000  ; 
18,500  shares  of  the  capital  stock  of  the  Brookline  Gas  Light 
Company;  5,176  shares  of  the  capital  stock  of  the  Dorchester 
Gas  Light  Company;  1,382  shares  of  the  capital  stock  of  the 
Jamaica  Plain  Gas  Light  Company  ; certificates  of  indebtedness  of 
the  Brookline  Gas  Light  Company  of  the  face  value  of  $1,615,000  ; 
all  the  right,  title  and  interest  of  the  New  England  Gas  and  Coke 
Company  in  and  to  the  entire  capital  stock  of  the  Massachusetts 
Pipe  Line  Gas  Company,  with  the  right  of  subscription  thereto, 
and  the  right  to  any  and  all  increase  of  stock  of  said  company 
hereafter  issued. 

The  bonds  referred  to  are  dated  Dec.  1,  1897,  mature  Dec.  1, 
1937,  and  bear  interest  at  the  rate  of  five  per  cent,  per  annum. 

This  curious  and  anomalous  organization  was  made  possi- 
ble by  the  words  in  the  Pipe  Line  charter  authorizing  it  to 
buy  and  to  deal  in  gas.  The  capital  stock  of  the  Pipe  Line 
was  thus  paid  in  out  of  the  proceeds  of  the  so-called  bonds 
of  the  Coke  Company.  Its  officers  are  practically  the  same  ; 
its  control  is  certainly  the  same.  The  Coke  Company  sold 
a part  of  its  holding  in  land  to  the  Pipe  Line  Company,  and 
erected  thereon  a holder  and  purifying  house.  The  same 
set  of  men  do  work  for  both  concerns;  their  offices  are  the 
same  ; in  all  practical  effects  the  two  concerns  are  identical. 
The  Coke  Company  denies  that  it  is  in  any  manner  subject 
to  the  jurisdiction  of  the  Gas  Commission  or  to  any  of  the 
provisions  of  law  applicable  to  gas  companies.  The  prop- 
erty upon  which  it  has  issued  $35,000,000  of  stocks  and 
bonds  may  be  worth  $7,000,000  or  $8,000,000.  It  is  a 
stock-watering  enterprise  on  a gigantic  scale.  On  Decem- 
ber 1,  1897,  as  a part  of  the  initiation  of  this  scheme,  con- 
tracts were  entered  into  between  the  Pipe  Line  Company 
and  the  various  Boston  gas  companies. 

The  contracts  between  the  Pipe  Line  and  the  other  com- 
panies are  precisely  the  same,  except  that  the  amounts  of 
gas  to  be  taken  at  the  outset  slightly  vary.  To  all  of  these 
contracts  the  New  England  Gas  and  Coke  Company  is  a 


28 


party.  All  of  the  gas  companies  in  Boston,  except  the  East 
Boston  and  the  Charlestown,  have  thus  agreed  to  take  all 
their  gas  from  the  Coke  Company’s  works,  through  the  Pipe 
Line,  so  soon  as  a sufficient  amount  is  manufactured  and  the 
required  notice  is  given.  Coke  ovens  have  been  erected, 
and  in  December,  1899,  gas  first  began  to  be  supplied  from 
these  works  in  Everett.  The  manufacturing  works  of  the 
Jamaica  Plain  Company  have  been  shut  down;  about  nine- 
tenths  of  the  gas  of  the  Brookline  Company  is  being  supplied 
from  these  works,  and  some  quantities  to  the  Boston  and 
Dorchester  companies.  On  the  evidence,  the  capacity  of 
the  works  is  now  about  two-thirds  of  the  annual  consump- 
tion of  all  the  Boston  companies.  While  the  written  con- 
tracts above  set  forth  provide  that  this  gas  shall  be  sold  by 
the  Pipe  Line  from  the  coke  works  to  the  various  gas  com- 
panies at  the  price  of  twenty  cents  for  twelve  candle-power 
gas,  the  gas  actually  delivered  is  said  to  be  of  eighteen  or 
nineteen  candle-power,  and  the  prices  charged  to  the  com- 
panies under  the  direct  control  of  the  Coke  Company  are 
thirty  cents  per  thousand  cubic  feet.  The  Boston  Gas  Light 
Company  has  refused  to  pay  in  excess  of  twenty-five  cents 
per  thousand  feet,  under  the  advice  of  counsel.  The  ground 
of  this  objection  is  that  the  charter  of  the  Pipe  Line  Com- 
pany does  not  permit  it  to  sell  gas  to  any  gas  company  at  a 
price  in  excess  of  twenty-five  cents.  This  ground  seems  to 
your  committee  well  taken.  There  is  no  doubt  that  the  Pipe 
Line  charter  was  obtained  on  the  assurance  of  its  promoters 
that  the  price  of  gas  to  consumers  would  be  very  much  re- 
duced. There  is  no  doubt  that  the  Legislature  did  not  intend 
to  permit  competition  and  duplication  of  capital  in  the  gas 
companies,  except  with  the  assurance  that  the  price  of  gas 
should  be  reduced  ; hence  the  provision  in  the  Pipe  Line 
charter  that  on  sales  to  other  companies  the  price  should 
not  exceed  twenty  cents  per  thousand  cubic  feet  for  gas  of 
five  hundred  and  eighty  British  thermal  units,  and  not  ex- 
ceeding five  cents  additional  for  gas  of  the  candle-power 
required  by  law,  within  the  five-mile  limit  of  the  State 
House  applicable  to  the  gas  companies  now  under  considera- 
tion. If  the  Pipe  Line  Company  is  relieved  from  the  limita- 
tion of  price  in  its  charter  simply  by  selling  gas  of  one  or 


29 


two  candle-power  above  the  candle-power  required  by  law 
(which  is  sixteen) , it  may  then,  under  the  speculative  manage- 
ment which  has  gotten  control  of  several  of  the  Boston  gas 
companies,  fix  any  price  it  pleases  to  consumers  in  Boston. 
If  it  has  or  can  obtain  control  of  the  Boston,  Bay  State, 
South  Boston  and  Roxbury  companies,  as  it  now  has  control 
of  the  Dorchester,  Jamaica  Plain  and  Brookline  companies, 
it  will  be  enabled  to  sell  2,500,000,000  feet  of  gas  per  year, 
at  such  price  as  it  chooses  to  fix.  If  contracts  for  the  sale 
of  gas  by  the  Pipe  Line  at  prices  in  excess  of  twenty-five 
cents  are  valid  contracts,  their  obligation  cannot  be  impaired 
under  the  constitution  of  the  United  States,  and  the  Legislat- 
ure is  powerless.  Your  committee  are  of  the  opinion  that 
the  sales  from  the  Pipe  Line  Company  to  the  various  com- 
panies at  prices  in  excess  of  twenty-five  cents  are  violations 
of  law,  contrary  to  public  policy,  and  that  the  public  welfare 
absolutely  demands  that  these  sales  should  be  effectually 
prohibited,  and  that  the  limitation  in  the  Pipe  Line  charter 
of  a price  of  twenty-five  cents  for  sales  to  other  gas  com- 
panies should  be  made  effectual. 

For  fifteen  years  the  Commonwealth  has  been  endeavor- 
ing to  regulate  public-service  corporations  by  commission, 
and  to  exclude  competition.  If  the  scheme  now  being  oper- 
ated by  the  New  England  Gas  and  Coke  Company  by  means 
of  the  Pipe  Line  charter  is  permitted  to  go  unchecked,  both 
competition  and  regulation  would  have  been  excluded,  and 
the  Boston  gas  consumers  would  be  subject  to  the  mercies 
of  an  unregulated  monopoly.  The  situation  is  critical. 
None  of  the  previous  attempts  to  exploit  these  companies 
have  involved  so  dangerous  an  encroachment  upon  the  rights 
of  the  consumers,  or  have  promised  so  much  of  extortion 
from  the  gas  consumers.  This  New  England  Gas  and  Coke 
Company,  an  association  of  eleven  trustees,  nine  of  whom 
are  non-residents  of  this  Commonwealth,  deny  any  account- 
ability to  our  laws  or  regulating  commission,  controlling  the 
Pipe  Line  charter  granted  by  the  Legislature  for  the  purpose 
of  cheapening  gas,  are  now  attempting  by  and  through  this 
charter  to  set  at  defiance  every  one  of  the  principles  hitherto 
relied  upon  to  give  the  consumer  a fair  product  at  a fair 
price. 


BO 


In  regard  to  that  portion  of  the  order  wherein  your  com- 
mittee is  ordered  to  report  if  there  has  been  any  violation 
of  any  of  the  laws  of  this  Commonwealth  by  any  corporation 
or  association,  your  committee  reports  that  the  Boston  and 
Brookline  contract  is  a violation  of  law.  That  it  is  such 
violation  seems  too  clear  to  need  argument.  In  the 
case  of  Davis  v.  Old  Colony  R.R.,  131  Mass.  258,  our 
supreme  court  held  that  an  arrangement  made  by  the 
railroad  company  to  contribute  to  the  Peace  Jubilee  fund 
was  illegal  and  would  not  be  enforced.  It  is  elementary  that 
corporations  have  only  those  powers  which  are  specially  given 
them  by  their  charters.  The  Boston  Gas  Light  Company  and 
the  Brookline  Gas  Light  Company  were  organized  for  the  pur- 
pose of  manufacturing  and  selling  gas.  Neither  was  organized 
for  the  purpose  of  earning  money  for  the  benefit  of  the  stock- 
holders of  the  other.  If  the  Boston  Gas  Light  Company  may 
illegally  pay  from  the  treasury  of  its  company  into  the 
treasury  of  the  Brookline  Company  moneys  desired  by 
that  company  to  pay  a dividend  upon  its  stocks,  any  gas 
company  may  make  a gift  to  any  person  or  corporation  at 
the  will  of  its  directors.  If  a gas  company  may  give  away 
its  assets,  it  may  so  cripple  itself  as  to  be  entirely  unable  to 
perform  its  public  duties.  As  the  Board  of  Gas  and  Electric 
Light  Commissioners  have  already  denounced  this  contract 
as  an  unconscionable  one,  contrary  to  public  policy,  and 
recommended  that  it  be  abrogated  (see  their  report  for 
1898,  page  10),  it  may  fairly  be  assumed  that  if  given  power 
this  Board  would  order  the  contract  to  be  abrogated.  We 
recommend  that  it  be  abrogated,  and  we  recommend  the 
passage  of  an  act  which  shall  provide  that  no  contract  be- 
tween gas  companies  shall  be  valid  unless  the  same  be  first 
approved  by  the  Board  of  Gas  and  Electric  Light  Commis- 
sioners. 

There  is  a third  violation  of  law  which  in  the  judgment  of 
your  committee  the  public  interest  demands  to  have  reme- 
died. The  New  England  Gas  and  Coke  Company,  as  above  set 
forth,  denies  any  accountability  to  the  Gas  Commission  or  to 
the  laws  applicable  to  gas  companies  in  this  Commonwealth. 
It  has  issued  $17,500,000  of  bonds  not  under  the  provision 
of  Acts  of  1885,  chapter  346,  and  the  other  provisions  appli- 


31 


cable  to  gas  companies.  The  proceeds  of  these  bonds  have 
not,  as  required  by  law,  been  applied  to  the  payment  of 
obligations  incurred  for  the  enlargement  and  extension  of  the 
works  and  the  purchase  of  real  estate  for  the  use  of  the  com- 
pany. They  have  in  large  part  been  applied  to  the  payment 
of  the  capital  stock  of  the  Pipe  Line,  to  the  purchase  of 
stock  of  the  Jamaica  Plain  and  Brookline  companies  and  of 
Boston  United  Gas  bonds.  Not  only  has  this  company  thus 
violated  the  laws  of  the  Commonwealth,  but  its  entire 
scheme  is  one  which  in  the  judgment  of  your  committee  is 
contrary  to  public  policy,  certain  to  work  great  injury  both 
to  the  investing  public  and  to  the  gas-consuming  public. 

If  it  is  obnoxious  to  sound  public  policy  to  permit  a for- 
eign corporation  to  issue  stocks  and  bonds  based  upon  or 
secured  by  the  stock  of  domestic  corporations,  it  is  cer- 
tainly obnoxious  to  sound  public  policy  to  permit  a syndicate 
to  do  it.  The  purpose  of  this  re-capitalization  is  in  all  cases 
to  induce  the  investing  public  to  purchase  stocks  and  bonds 
supposed  to  be  based  upon  the  earning  power  of  the  public- 
service  corporation  far  in  excess  of  ordinary  interest  rates. 
When  these  securities  have  once  been  placed,  then  the  Leg- 
islature is  met  with  the  claim  that  bona  fide  investors  would 
be  injured  by  a reduction  of  rates,  and  that  therefore  what 
would  otherwise  be  extortionate  rates  must  be  permitted  to 
continue.  This  New  England  Gas  and  Coke  Company  has 
contracts  by  which  it  proposes  shortly  to  manufacture  the  en- 
tire gas  supply  of  Boston.  It  needs  no  argument  to  show 
that  it  is  inconsistent  with  public  interest  that  the  company 
manufacturing  all  the  gas  of  this  metropolitan  district  should 
be  freed  from  all  the  statutory  obligations  and  regulating 
supervision  applicable  to  other  gas  companies. 

In  regard  to  that  portion  of  the  order  which  directs  us  to 
report  the  gross  and  the  net  cost  of  the  production  and  dis- 
tribution of  gas,  together  with  all  details  showing  how  such 
cost  and  prices  are  arrived  at,  your  committee  has  to  report 
the  following  resolution,  which  was  adopted  by  your  com- 
mittee on  May  15,  1900,  by  a vote  of  7 to  5,  3 members  of 
the  committee  being  absent,  the  vote  subsequently  standing 
at  another  meeting  7 to  7,  one  member  not  voting  : — 


32 


Whereas , The  New  England  Gas  and  Coke  Company,  an  asso- 
ciation of  individuals,  is  now  manufacturing  a large  part  of  the 
gas  sold  in  the  city  of  Boston,  and  is  selling  the  same  through 
companies  under  its  control ; and  4( 

Whereas , Said  New  England  Gas  and  Coke  Company  has  stated 
that  it  owns  or  controls  practically  all  the  gas  companies  in  the 
city  of  Boston,  and  that  it  earns  or  will  earn  $1,298,500  net  per 
annum,  of  which  all  but  $248,000  comes  from  the  sale  of  gas  in 
Boston  ; and 

Whereas , The  aforesaid  income  of  the  New  England  Gas  and 
Coke  Company  can  be  derived  only  from  the  control  of  practically 
all  the  gas  companies  doing  business  in  Boston  ; and 

Whereas,  Said  New  England  Gas  and  Coke  Company  has  such 
control  of  certain  gas  companies  of  Boston  that  no  inquiry  can  be 
effectual  unless  said  New  England  Gas  and  Coke  Company  can  be 
made  to  be  subservient  to  the  laws  of  this  Commonwealth  ; and 

Whereas , Said  association  refuses  to  submit  its  books  to  the 
examination  of  this  committee,  and  refuses  to  inform  this  commit- 
tee regarding  the  cost  of  the  production  of  the  gas  manufactured 
by  it,  and  a fair  return  on  the  capital  invested  by  it  in  the  manu- 
facture of  said  gas,  and  contends  that,  not  being  a corporation,  it 
is  beyond  the  control  of  the  laws  of  this  Commonwealth  ; now 
therefore  — 

Voted , That,  unless  and  until  said  association  is  thoroughly 
investigated,  it  is  impossible  to  report  to  the  Legislature  the  cost 
of  gas  in  Boston  ; that  we  cannot  recommend  the  passage  of  any 
act  compelling  any  reduction  in  the  price  of  gas  in  said  city  until 
said  investigation  has  been  made,  or  until  the  New  England  Gas 
and  Coke  Company  has  been  brought  under  the  laws  of  this  Com- 
monwealth relating  to  gas  companies. 

Voted , That  we  recommend  to  the  Legislature  the  passage  of 
the  following  act : — 

An  Act  relative  to  the  Sale  of  Gas  in  the  City  of  Boston. 

Be  it  enacted , etc.,  as  follows : 

Section  1.  After  the  first  day  of  January,  in  the  year  nineteen 
hundred  and  one,  no  gas  for  heating  or  illuminating  purposes  shall 
be  sold  in  the  city  of  Boston,  excepting  gas  manufactured,  distrib- 
uted and  sold  by  a corporation,  or  corporations,  which  have  com- 
plied with  the  laws  of  Massachusetts  relating  to  gas  companies  and 
to  the  requirements  of  the  board  of  gas  and  electric  light  commis- 
sioners. 

Section  2.  The  supreme  judicial  court  and  the  superior  court 
shall  each  of  them  have  jurisdiction  in  equity  at  the  suit  of  the 


33 


attorney-general  or  of  any  ten  citizens  of  Boston  to  enjoin  any 
and  every  person  and  corporation  from  selling  any  gas  for  heating 
or  illuminating  purposes  in  the  city  of  Boston  after  the  first  day  of 
January  in  the  year  nineteen  hundred  and  one,  excepting  gas  which 
has  been  manufactured  by  a corporation  which  has  complied  with 
the  laws  of  Massachusetts  relating  to  gas  companies. 

Section  3.  Any  person  or  association  now  engaged  in  the  busi- 
ness of  manufacturing  gas  which  is  sold  in  Boston  may,  within  six 
months  from  the  date  of  the  passage  of  this  act,  organize,  or  cause 
to  be  organized,  a corporation  for  the  purpose  of  continuing  the 
manufacturing  business  heretofore  carried  on  by  such  person  or 
association,  including  the  business  of  manufacturing  gas  and  for 
other  manufacturing  purposes.  All  existing  laws  relating  to  gas 
companies  shall  apply  to  such  corporation,  excepting  that  the  cap- 
ital stock  thereof  shall  not  be  limited  to  five  hundred  thousand 
dollars. 

Section  4.  This  act  shall  take  effect  upon  its  passage. 

It  would  be  infinitely  better  for  the  public  to  leave  the 
New  England  Gas  and  Coke  Company  to  work  out  its  own 
salvation  or  destruction  as  a trust,  than  to  sanction  its  past 
and  merely  provide  that  in  future  it  shall  be  subject  to  the 
supervision  of  the  Gas  Commission,  without  first  compelling 
it  to  incorporate.  This  wTould  be  legislative  recognition  and 
approval  of  its  $35,000,000  of  securities,  and  would  compel 
the  Gas  Commission  for  all  time  in  arriving  at  the  cost  price 
of  gas  to  reckon  and  allow  all  charges,  interest  and  dividends 
that  the  Coke  Company  chose  to  pay  upon  its  $35,000,000 
securities,  not  exceeding  the  ten  per  cent,  heretofore  recog- 
nized by  custom.  Clearly  under  such  a law  the  price  of 
gas  must  be  at  once  raised.  Clearly  after  such  legislative 
approval  no  court  would  permit  commissioners  to  fix  a price 
of  gas  so  low  that  a fair  dividend  on  all  its  capitalization 
oould  not  be  paid. 


CONDENSATION  OF  A MINORITY  REPORT. 


SIGNED  BY  CHARLES  F.  A.  SMITH. 


I agree  in  the  main  with  the  facts  set  forth  in  the  so-called 
majority  report  of  the  committee,  but  am  unable  to  concur 
with  them  in  all  their  conclusions  and  recommendations. 

The  order  under  which  we  acted  was  so  broad  and  far- 
reaching  in  its  scope  as  to  open  up  a vast  field  of  inquiry 
and  to  severely  tax  even  the -trained  minds  of  experts.  We 
were  to  report  on  the  price  of  gas  and  in  detail  how  it  was 
reached,  and  also  any  violations  of  law  and  what  punishments 
had  been  rendered  unto  the  offenders.  As  the  Gas  Com- 
mission, established  and  maintained  to  oversee  the  business, 
has  never  been  able  to  solve  the  Boston  gas  problem,  it 
would  not  be  expected  that  a committee  of  the  Legislature, 
without  any  special  training  on  the  subject,  would  be  able 
to  agree  on  any  one  remedy. 

The  Boston  gas  question,  already  greatly  befogged,  be- 
came even  more  complicated  upon  the  entry  of  the  New 
England  Gas  and  Coke  Company  into  the  arena.  This  com- 
pany is  an  association  of  individuals  to  manufacture  coke, 
tar,  ammonia  and  other  residuals.  It  produces  as  a by- 
product about  two-thirds  of  the  gas  now  used  in  Boston, 
which  it  sells  to  the  Massachusetts  Pipe  Line  Company, 
which  it  re-sells  to  several  of  the  local  Boston  gas  compa- 
nies. Hence,  to  solve  the  problem  of  the  cost  of  manufact- 
uring gas,  the  most  important  factor  of  the  hearings  was  the 
Gas  and  Coke  Company’s  books  and  business ; but  any 
question  directed  to  any  part  of  the  business  of  that  company 
was  objected  to  by  counsel,  on  the  ground  that  this  company 
was  not  amenable  to  the  laws  relating  to  gas  companies.  A 
request  for  the  books  of  this  company  which  would  disclose 
to  them  such  information  as  they  needed  for  the  purposes 


35 


of  the  investigation  was  refused  by  the  treasurer,  your  com- 
mittee having  previously  voted  to  investigate  this  associa- 
tion. Having  thus  voted,  consistent  action  of  the  committee 
required  that  said  treasurer  be  summoned  before  the  bar  of 
the  House,  that  its  demand  might  be  enforced ; but  at  this 
juncture  a majority  voted  not  to  further  press  the  point. 
Thus  was  lost  an  opportunity  of  early  testing  the  legal 
status  of  this  great  enterprise,  and  its  right  to  defy  the 
Legislature  and  its  laws. 

Relative  to  the  Price  of  Gas . 

It  is  conceded  by  all  parties  that  the  Charlestown  and 
East  Boston  companies  cannot  afford  to  sell  at  a price  under 
one  dollar.  An  examination  of  the  returns  filed  with  the 
Gas  Commission  shows  that  the  Brookline,  Jamaica  Plain 
and  some  of  the  gas  used  by  the  Boston  Company  is  manu- 
factured by  the  Coke  Company  and  sold  to  the  local  com- 
panies, and  that  contracts  have  been  made  to  supply  all  the 
other  Boston  companies  except  the  Charlestown  and  East 
Boston.  All  these  contracts  are  on  a basis  of  not  over 
twenty-five  cents.  It  seems  clear  that  a substantial  reduc- 
tion in  the  price  of  gas  charged  by  these  companies  might 
be  made  if  all  gas  used  in  Boston  was  supplied  by  the  Pipe 
Line  and  Bay  State  companies  at  a price  between  twenty- 
five  and  thirty  cents ; that  the  companies  might  sell  for  less 
than  one  dollar  and  still  pay  a profit  and  fair  dividends ; 
but  legislation  ordering  a reduction  from  the  present  price 
of  one  dollar,  which  might  drive  the  companies  to  reduce 
the  present  candle-power  in  order  to  escape  selling  gas  at  a 
loss,  certainly  would  not  be  in  the  interests  of  the  people. 
It  would  be  far  better  for  the  community  to  improve  the 
quality,  or  at  least  not  lower  it,  than  to  take  off  ten  or  fifteen 
cents  from  the  present  price,  and  lower  the  grade. 

A consolidation  of  all  the  companies  would  still  more 
expedite  a settlement  of  the  gas  war  and  Boston  gas  prob- 
lem. The  Boston  and  Brookline  contract  is  a cleverly 
arranged  scheme  of  quasi-consolidation,  by  which  the  former 
company  has  paid  the  latter  company  thousands  of  dollars, 
in  order  that  the  Brookline  Company  should  be  able  to  pay 


3G 


a dividend  of  ten  per  cent.  The  transaction  is  a simple  gift 
of  money,  and  would  seem  to  be  beyond  the  scope  of  its 
charter  rights,  — a detriment  to  its  stockholders,  ultra 
vires , and  hence  illegal.  But,  as  the  question  of  its  legality 
is  now  before  the  courts,  action  on  the  part  of  the  Legislat- 
ure may  well  be  deferred  until  a decision  is  received. 

It  is  fair  to  assume  that  Boston  will  soon  be  almost  wholly 
dependent  upon  the  Coke  Company  for  its  gas  supply.  The 
manufacturing  plants  of  the  other  companies  will  be  idle ; 
all  gas  will  be  sold  to  them  by  it ; it  will  then  practically 
control  the  situation.  If  it  is  to  sell  gas  and  operate  in  the 
territory  of  the  present  companies,  which  are  under  the 
control  Qf  the  Gas  Commission,  why  should  it  not  be  super- 
vised by  that  tribunal  ? The  Coke  Company  must  have  been 
conceived  in  the  brains  of  men  far  from  being  imbeciles. 
Considering  that  it  deals  with  a subject  the  sale  of  which  is 
regulated  by  law,  it  is  apparently  one  of  the  cleverest  ar- 
ranged schemes  to  avoid  giving  publicity  to  its  affairs  that 
has  ever  been  called  to  the  public  attention.  But  this  does 
not  excuse  it  from  complying  with  laws  made  for  the  good 
of  the  community.  No  law  prevents  an  individual  or  an 
association  of  individuals  from  manufacturing  gas  and  selling 
the  same,  provided  that  he  or  they  comply  with  laws  regu- 
lating such  manufacture  and  sale.  It  is  not  necessary  to 
incorporate  in  order  to  do  this ; hence  the  individuals  com- 
prising the  New  England  Gas  and  Coke  Company  have  a 
perfect  right  to  manufacture  gas.  But  as  soon  as  they 
offer  it  for  sale,  justice,  if  not  the  law,  would  seem  to 
require  that  they  comply  with  such  laws  as  other  companies 
are  forced  to  obey. 

The  following  bill  is  offered  to  prevent  the  New  England 
Gas  and  Coke  Company,  by  any  technicality,  from  escaping 
that  regulation  by  the  authorities  which  all  companies  in 
Massachusetts  are  bound  to  obey  : — 

An  Act  in  Relation  to  Manufacturers  of  Gas. 

Be  it  enacted , etc.,  ds  follows: 

Section  1 . All  persons,  associations  and  corporations  engaged 
in  the  business  of  manufacturing  and  selling  gas  suitable  for  illu- 
minating, heating  or  manufacturing  purposes,  or  gas  which  by 


37 


mixture,  enrichment  or  other  process  of  treatment  may  be  con- 
verted into  gas  suitable  for  illuminating,  heating  or  manufacturing 
purposes,  shall  be  subject  to  all  the  provisions,  rights,  liabilities, 
penalties,  privileges  and  duties  which  by  general  laws  now  are  or 
may  hereafter  be  applicable  to  gas  companies. 

Section  2.  This  act  shall  take  effect  upon  its  passage. 

As  the  above  bill  accomplishes  all  that  seems  to  be  neces- 
sary by  way  of  regulating  the  manufacture  of  gas  by  the 
New  England  Gas  and  Coke  Company,  and  as  the  legality 
of  an  act  enforcing  incorporation  on  the  part  of  that  company 
is  at  least  of  doubtful  legality,  I cannot  favor  the  bill  offered 
by  others  of  the  committee,  calling  for  such  incorporation. 


38 


CONDENSATION  OF  A MINORITY  REPORT. 


SIGNED  BY  B.  HERBERT  WOODSUM,  WILLIAM  H.  LOTT,  FRANCIS  A. 
HARRINGTON,  ALBERT  S.  APSEY,  M.  W.  BURLEN,  JAMES 
HOWELL,  WILLIAM  L.  MOONEY. 


Relative  to  the  Price  of  Gas. 

We  believe  it  unwise  to  recommend  this  year  any  reduc- 
tion in  the  price  of  gas  to  the  consumers  of  the  city  of 
Boston. 

It  has  been  admitted  by  all  parties  that  the  cost  of  gas  has 
been  increased  at  least  fifteen  cents  a thousand  cubic  feet 
since  July  4,  1899. 

Relative  to  Violations  of  Law. 

We  are  not  of  opinion  that  sales  of  gas  by  the  Pipe  Line 
Company,  at  a price  in  excess  of  twenty-five  cents,  where 
the  gas  is  of  a higher  candle-power  than  that  required  by 
statute,  is  a violation  of  the  law ; but  we  think  if  this  is  a 
violation  of  the  law  the  Board  of  Gas  and  Electric  Light 
Commissioners  may  at  any  time  order  a reduction.  This 
we  believe  is  distinctly  a matter  which  calls  for  action  by  the 
Board  rather  than  by  the  Legislature. 

We  are  of  opinion  that  there  was  a valid  consideration  for 
the  contract  now  existing  between  the  Boston  and  Brookline 
companies;  viz.,  the  prevention  of  the  competition  which 
existed  prior  to  the  execution  of  the  contract. 

We  do  not  believe  that  the  organization  and  operation  of 
the  New  England  Gas  and  Coke  Company  is  in  violation  of 
law.  It  was  organized  as  a voluntary  association  of  indi- 
viduals for  manufacturing  purposes,  and,  while  it  sells  gas 
to  the  Pipe  Line  Company,  the  price  of  gas  can  be  regulated 
by  the  Gas  Commissioners. 


39 


There  may  come  a time  when  the  Coke  Company,  through 
the  Pipe  Line  Company  and  the  various  local  companies, 
may  produce  and  supply  all  the  gas  consumed  in  Boston  and 
neighborhood.  In  order  to  prevent  the  companies  from 
contracting  to  pay  more  for  gas  than  they  could  manufacture 
it  for,  we  report  the  following  bill,  and  recommend  its 
passage : — 

An  Act  relative  to  Contracts  for  the  Purchase  of  Gas  by 
Gas  Companies. 

Be  it  enacted , etc.,  as  follows : 

Section  1 . Whenever,  in  the  opinion  of  the  board  of  gas  and 
electric  light  commissioners,  any  contract  or  arrangement  hereafter 
made  for  the  purchase  of  gas  by  a gas  company  of  any  corporation 
or  association  provides  for  the  purchase  of  gas  at  a price  greater 
than  the  cost  of  manufacture  thereof,  if  manufactured  by  the  pur- 
chasing company,  including  in  said  cost  a fair  rate  of  interest  on 
the  cost  of  the  works  required  for  such  manufacture,  said  Board 
may,  after  notice  and  hearing,  order  such  contract  or  arrangement 
to  be  annulled,  and  such  order  shall  annul  such  contract  or  ar- 
rangement ; but  either  or  any  of  the  parties  to  said  contract  or 
arrangement  shall  have  and  may  take  an  appeal  from  such  order 
to  the  supreme  judicial  court  within  thirty  days  thereafter. 

Section  2.  Any  court  having  jurisdiction  in  equity  may,  on 
application  of  such  board,  by  any  suitable  process  or  decree  in 
equity,  enforce  the  lawful  orders  of  said  board  made  under  section 
one  of  this  act.  It  shall  be  the  duty  of  the  attorney-general,  on 
request  of  said  board,  to  institute  proceedings  to  enforce  the  pro- 
visions of  this  act. 

Section  3.  This  act  shall  take  effect  upon  its  passage. 


